New Zealanders have warned of the risks of buying new build as building costs rise

He’s been in the industry for 25 years and says he’s never seen anything like it.

“We just found out the other day that GIB, there’s a four month delay – it’s a crazy time to be in the business,” Duff said.

Corelogic’s Cost to Build Index found prices rising at the fastest pace in nearly four years thanks to COVID-related supply issues, lumber prices and record consents.

Construction costs are up 6.1% in 2021 and those making the mahi say that could be conservative.

“Certainly if you talk to anyone in the industry, they all say, well, 6% is pretty low. The cost increases that they actually see from suppliers are much higher” , says Kelvin Davidson, chief real estate economist at Corelogic.

Davidson thinks the only way is up.

“It’s not going to be the peak, I think we could easily see 10% growth in construction costs over the next few quarters, and maybe stay there for a while,” he says.

To combat this, Duff is now asking clients to factor in a price increase of at least 20% by the time a project is complete.

“You can’t even offer fixed quotes to anyone anymore. Fixed quotes are almost sold out, because every couple of months there will be a price hike,” says Duff.

Property education company Property Apprentice is now advising clients not to buy new due to exploding costs.

“You just have to be careful about the deals you make. And I’m not saying all new construction is bad either, you just have to make sure you’ve got the finances sorted before you make that deal,” Property According to Debbie Roberts, apprentice investment coach.

Construction costs leaving potential builders and buyers banging their heads against a very expensive wall.